Maersk’s decision to leave port rattles state
By Molly Parker
mparker@scbiznews.com
Published Dec. 19, 2008
Gov. Mark Sanford’s office says Maersk’s announcement that it is pulling out of the Port of Charleston is case and point that the S.C. State Ports Authority’s operating model should be reexamined.
The governor has long been an advocate of the SPA operating like most other ports across the nation, where the state leases the land to a private company that operates the terminals.
“It does highlight the importance of moving to a business model where we can have more private capital infused into the system,” Sanford spokesman Joel Sawyer said.
Meanwhile, other observers questioned whether Maersk’s decision is part of a hardball negotiation tactic to sway the International Longshoremen’s Association. The Denmark company has asked the three local ILA chapters in Charleston to sign off on a plan that would allow Maersk to operate out of the SPA’s common-user gates.
Such a move would eliminate several dozen checker and clerk union positions in exchange for work done by SPA employees. Union members voted last week to deny Maerk’s request.
In its statement Thursday, Maersk blamed the ILA for its decision to leave. Today, the union’s national chapter issued a stinging rebuke of the company, saying that Maersk has made it clear “it places its dedicated ILA workers at the end of their corporate greed chain, behind shareholders and profits.”
Hal Johnson, president and CEO of the Upstate Alliance, called Maersk’s tough stand a “leveraging tool.”
“But if they’ve put it in the press, they’re certainly willing to go that route,” Johnson said. “If they do leave it will cause some pain at the port, but I think there will be someone coming right behind them to take that space.”
Maersk makes more than 400 ship calls at the Port of Charleston every year and represents about 20% of the SPA’s container business. Unable to reach an agreement with the ILA to cut costs, Maersk said it will leave no later than Dec. 31, 2010 when its contract expires.
Hagood Morrison, a commercial real estate broker with Colliers Keenan in Charleston, also doubted that Maersk would leave in the end, even though the company said it would start by removing one service in January that represents about a quarter of its business here.
“We lose track of the fact, the hard cold fact, that the economy will come back, that the Panama Canal will be widened, and there will be a tremendous pressure on these Southeastern ports,” said Morrison, who represents commercial developments tied to the port. “They can’t afford to close the door from coming into one of these major ports.”
Still, there was no question that Maerk’s announcement on Thursday shook the local maritime industry that relies on strong trade activity at the Port of Charleston. Already this fiscal year, between July and November, container traffic was down 4% compared to last year. In November, it was off 13% from the same month in 2007.
SPA chief executive Bernard Groseclose said the port would work tirelessly to lure new shipping lines to replace the business.
“This port, our region and our state will suffer greatly from Maersk’s departure,” he said. “This will mean great losses for our economy at a time when we can least afford it.”
The state unemployment rate was higher last month than it has been in 25 years. Thousands of jobs across the state are tied to port activity.
“It’s a say day for South Carolina,” said Pat Barber, president of the Charleston Motor Carriers Association and the owner of a local trucking company. “The finger pointing going on today is exactly what got us here in the first place. Had we collectively come together, I’m sure we could have found some compromise.”
What’s needed now is leadership from Columbia to “pull together and show a collective consensus” that the state stands behind the port system instead of losing focus on attempts to rewrite the business model, Barber said.
Sawyer said that the governor also would support moving the SPA directly under his purview if the appetite doesn’t exist for a private operating model. That would mean scrapping the SPA’s board and making port executives directly responsible to him, Sawyer said. That concept was introduced last week in legislation filed by Rep. Jim Merrill, a Charleston Republican.
“This particular news is a reminder that the global shipping game has changed,” Sawyer said.
Reach Molly Parker at 843-849-3144
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Comments:
Added:
19 Dec 2008
Another example of unions just not understanding the big picture. Of course Maersk puts their shareholders in front of the ILA; that's who Maersk management answers to and who they are in the end responsible for. The purpose of a corporations is to generate as much profit as is legally possible for its owners. This is the problem with the union mentality - union leaders and members think that corporations are in business to provide them with "fair" wages as long as they want to work. It's completely contrary to a capitalist system.
L Boyd
Added:
19 Dec 2008
Clearly the Governor's office has no clue what they're talking about. Bottom line is Mearsk knows the SPA is head & shoulders a more efficient business model and the model they're currently working under (like "Big Three" automakers) is "unsustainable". If anything the SPA's model should be praised.
Silence Do Good
Added:
19 Dec 2008
ah yes...only those "dirty corporations" are guilty of greed..the scoundrels! ILA is quick to forget that were it not for those "dirty corporations" they wouldn't have those jobs and they would have no union...Greed may exist, but please don't play "social angel" to the thousands of folks in the state whose jobs depend on the port activity. What do you call the fact that the ILA refuses to compromise and give some concessions in order to maintain one of their main sources of business, at the risk of numerous jobs besides their own, and in light of the global economic reality?????...sounds like GREED to me!! Those "dirty unionists"!!!!
PJM
Added:
19 Dec 2008
I personally believe that between the Ports and thae auto industry the union has just about cripled this country.why can't they operate non-union and get back to teamwork and employees/employers having a loyalty to oneanother,I believe that we as a nation need to get on our knees and beg Gods forgiveness for how selfish,lazy,and ungodly we have become.we are so blessed to be americans,let's get back to the basics,God,family and Country
Billy Mock
Added:
19 Dec 2008
The SC State Port Authority(SCSPA) is a entity of the SC gov. The SCSPA made $54.7 million in fiscal 2008 and did not pay a dime in taxes or rents to our state. The SPA has $191.7 million in their bank account and does not return profits to our state while at the same time the state is laying off teachers and closing down disabled childrens centers. An entity of the state gov should not compete against and eliminate private sector, tax paying citizens jobs only to increase their own unshared bottom line. Maersk made $4.6 billion net profit last year. Charleston ILA members are famous for speed and production averging 41.5 container moves per hour, the best in the world. The local born ILA members are proud SC citizens, pay taxes and contribute to their communities and businesses, we are the middle class. The ILA is trying it's best to protect good jobs while the SCSPA wants to eliminate jobs, pay low wages and increase their own internal bottom line. Mr. Bernard Groseclose CEO of the SCSPA makes a base salary of $264,000.00 plus bonuses and perks. Again, the Gov entity SCSPA should stay out of the free enterprise, competing, tax paying private job sector. SCSPA should be landlords of the port and nothing else. ILA longshoremen work Maersk's gate all across America's ports but only Charleston ILA must sacrifice their jobs and families to keep Maersk in Charleston. This mess is on the SCSPA hands for creating a monopoly as they have. Citizen's be aware this is a game of smoke and mirrors!
Bill T. Harwell, proud, native born SC resident and loyal 25 year member of ILA local 1771
Bill T. Harwell
Added:
20 Dec 2008
A union job at a pay scale of $60.00 per hour with no work or a non-union job at $25.00 per hour with a 40 hour work week. Which one would you want? The unions cost is about $400.00 per container to load or unload. It could be done for a lot less. Also check the port fees which are about $300.00 per container. These cost are more than the shipping companies make bring the containers from China. Something is wrong with this picture. This is not counting the Federal goverment duties and fees put on each container.
bargeman
Added:
20 Dec 2008
What the ILA conveniently leaves out is that Maersk business which moves to other ports will also be handled by ILA labor under the master (East Coast-wide) contract Maersk and other carriers have with the union. Thanks for adding fuel to the economic fire ILA!
Jessup
Added:
22 Dec 2008
I agree that the unions in this country have been part of the reason for the decline in profits for companies. THEY are greedy and expect to make the same amount of money when the company that they are so loyal to is making less. It only stands to reason that if your company is making less in profits, the employees may make less money, work less hours (less demand requires less production), or have a decrease in benefits. Unions want it all and they should wake up and realize that a half of loaf of bread is better than no bread at all.
Karen
Added:
22 Dec 2008
Does anyone understand that Savannah GA has put A LOT of money into it's ports and is taking business away from Charleston? Where do you think that 4% decrease in traffic went? Where do you think Mearsk will probably go?
I would not be so confident when a port that has the potiential to be such a big rival, is so close. Charleston was the largest port on the Southeast, but Savannah wants some of that action. They can offer everything that the port of Charleston can(rail/trucks/easy access to I95 etc), and to a large continer ship, the ports are very close. If Savannah costs less to do business with I would expect to see a bigger import/export decline in Charleston again this year.
Everyone is trying to save money now, you need to decide if you want to work, some work or hang on to you pride and do no work!! Wake up if you want to keep the Charleston port alive!!
KC
Added:
31 Dec 2008
Checkers in the Maersk yard don't serve a purpose. Bluntly put, they tell non-union operators to load trucks, if that. Non-union operators know how to work trucks without direct supervision. That's how the common-use yard operates. Yeah, blame Maersk for NOT wanting to pay for pointless "supervisors".
non-union worker
Added:
9 Jan 2009
I think after reading the comments Mr. Harwell makes the best points, thank unions in general for the wages you get as if not for unions we'd all be making the minimum wage. I've watched Maersk send its ships to Savannah for the past couple years, believe it, theres much more to this story than meets the eyes, one things for certain, the union did nothing wrong, this isn't their fault.
This looks like another story on the way to the elimination of the middle class
James Bishop
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Gov. Mark Sanford’s office says Maersk’s announcement that it is pulling out of the Port of Charleston is case and point that the S.C. State Ports Authority’s operating model should be reexamined. 